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Stolen e-signature found on accused’s hard drive used to convict in fraud scheme
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Electronic signatures are frequently used by businesses and organizations to efficiently execute and exchange documents. The increasingly ubiquitous nature of electronic signatures makes them open to abuse, if not carefully monitored and policed. Recently, the Ontario Superior Court of Justice considered this issue in R. v. Pusey[1], where evidence on the use of an electronic signature was central to the Court’s decision to convict the accused on charges of fraud.

Facts

The accused, Mr. Pusey, was a former staff director at the Fred Victor Centre (the “Centre”), a charitable organization in Toronto. He was also the principal of two companies (the “Companies”) that billed the Centre for thousands of dollars of work that was in fact performed by other staff members or subcontractors of the Centre, in violation of the Centre’s Code of Conduct relating to conflicts of interest.

The scheme was discovered when the Centre’s staff questioned a number of invoices for payments made to the Companies, pursuant to cheque requisitions signed by the accused. As a result, various payments totaling over $115,000 were paid out from the Centre to the Companies over a 16-month period.

The accused testified that the arrangement had the approval of the Centre’s Executive Director. The purported scheme saw the Companies bill the Centre for work done by subcontractors, who were then paid cash by Mr. Pusey in order to obtain savings and tax advantages for the Centre. The only documentary evidence advanced by the accused were contracts purportedly signed by both Mr. Pusey (on behalf of the Companies) and the Centre’s Executive Director.

Use of Electronic Signature

The Centre’s Executive Director testified that the contracts were fake, and denied signing them. The Court considered evidence that the accused’s computer and thumb drive contained electronic versions of the Executive Director’s signature, and also found that the accused would have had access to the signature.

Rather clumsily, versions of the electronic signatures on the accused’s hard drive were created and modified on the same date, which happened to correspond with the first date that one of the Companies invoiced the Centre.

A report from the Centre of Forensic Sciences determined that the e-signature and the “contract” signature “originated from the same source signature within the limits of practical certainty.”[2] Justice Goldstein went further, finding that “the signature on the so-called contract and the electronic signature found on Mr. Pusey’s computer…are identical.”[3] The Court rejected Mr. Pusey’s explanations and alternative theories in convicting him of fraud.

Key Takeaways

This case highlights some of the evidentiary issues and security concerns associated with electronic documents and signatures on negotiable instruments. Most common law jurisdictions, including Ontario, have for many years had legislation removing barriers for the use of electronic signatures in legal documents. As a result, with some exceptions (such as wills and trusts), electronic signatures are permitted to be used, even where such documents are otherwise required by law to be executed in writing.[4]

However, most statutes governing the use of electronic signatures do not impose any specific standard for reliability or security. As a result, it remains up to the person relying or adjudicating upon an electronic signature to determine its reliability or effectiveness.

Efforts to fraudulently misrepresent or forge an electronic signature may be easily uncovered where, as in this case, there is competing objective evidence to reveal the fraud. Absent specific statutory procedural or security requirements for electronic signatures[5], this case demonstrates that organizations should consider whether their document management and security systems are sophisticated enough to track the use (and potential misuse) of electronic signatures for day-to-day transactions and documents.

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